S.4 Commerce Insurance Caltec S.4

INSURANCE Insurance refers to a service that undertakes to safeguard and compensate the unfortunate few businessmen and organizations which might suffer from some risks insured against. It is an aid to trade which safeguards individuals and firms against losses arising from risks. The aim of insurance is to compensate a person for what he has lost and thus restore him back to business. The underlying principle of insurance is the pooling of risks. Pooling of Risks This means that every person expos ed to a risk should pay a small amount of money (premium) which goes to a common pool from which those who actually suffer from the stated risks are compensated. Thus the risk is spread over many people each bearing only a small proportion of the total los s. Insurance and Assarance Insurance This refers to cover against events which may or may not occur or take place eg theft accident and burglary. Assurance This refers to cover against events which are bound to happen; only that one is not certain ab the t ime of their occurrence e.g death and old age. BASIC TERMS USED IN INSURANCE Insurer This refers to the insurance company which grants the insurance cover by guaranteeing compensation in the event of a loss arising from an insured risk. Examples, of insure rs insurance companies in Uganda include State Wide Insurance Company ( SWICO). Pan Wide Insurance Company (PWICO), National Insurance Corporation ( NIC), Rio Insurance Company First Insurance Company, American Insurance Group (AIG), United Assurance Compa ny etc. Insured This refers to the person or business firm that takes out an insurance policy to be compensated by the insurance company in the event of a loss. Risk This is an event against which an insurance policy is taken out, eg. If one …